Studios to Decide Winner in Next-Gen Game Wars, Says Analyst

Posted Fri May 5, 2006 at 01:35 AM PDT by
Next-Gen Game Consoles It will be high-def movies, not games, that ultimately decide the next-gen game console wars, says a just-released industry forecast from a top analyst firm, reports Home Media Retailing.

"Notwithstanding the efforts of console manufacturers to deliver compelling exclusive content, we believe that the ultimate outcome of the console wars will be decided by the motion picture studios," said Michael Pachter, senior analyst at Wedbush Morgan Securities, in the "2006 Industry Report -- Flirting with Disaster, Will Sony’s Battle with Toshiba Determine the Outcome of the Console Transition?"

Sony's highly-anticipated PlayStation 3 console is due to launch worldwide this November and will be driven by Blu-Ray. Microsoft's XBox 360 arrived late last year without support for high-definition DVD, though the company plans to introduce in the third quarter of this year an add-on peripheral that will allow the console to play HD-DVD discs. (Nintendo announced last week it will also debut its next-gen game device, dubbed Wii, in 2006, though it will not support either Blu-Ray or HD-DVD.)

Citing standard DVD playback as key to Sony's previous success with the PlayStation 2 four years ago (it remains the market's current best-selling game console), the report says a growing hunger among consumers for increasing multimedia functionality will tip the scales in favor of one next-gen game system over the other -- provided the major studios jump on board with software support.

"Should the studios embrace Sony’s Blu-Ray standard for high-definition discs, we think Sony will gain an insurmountable advantage over Microsoft," continued Pachter. "Should the studios embrace Sony rival Toshiba's HD-DVD format, we think that Microsoft can maintain its first mover advantage and will dominate software sales for years to come."

The report also predicts that it will ultimately be the PlayStation 3 that emerges victorious primarily due to Hollywood's widespread support for Blu-Ray, despite the console's launch lagging a full year behind Xbox 360.

"We expect Xbox 360 to enjoy a first-mover advantage for the next two years... [though] the dominant console at the end of the next cycle will be the PS3, primarily due to our assessment that Sony will win the high-definition format war," said Pachter.
Tags: Xbox 360, PlayStation 3, Industry Forecasts, High-Def Gaming (all tags)